Nokia Corporation (ADR) (NYSE:NOK) Will Face Lower Margins: WFC

Analysts at Wells Fargo securities believe Nokia Corporation (ADR) (NYSE:NOK) will see lower profit margins due to handset discounting. Retailers are already discounting Nokia’s flagship Lumia 920 handset, which just came out last month.

At this point we don’t know if the carriers are absorbing the reductions in profit losses or if Nokia itself is taking the hit, but at least one analyst believes the discounts will create problems for Nokia’s bottom line.

Meanwhile AT&T Inc. (NYSE:T) continues to sell the handsets at $99 in its retail stores. That was the price it was introduced at when the phone launched in November. Also T-Mobile USA Inc. is giving away the Lumia 810 with new contracts.

Fritzsche said handset discounting is very common this time of the year, but nonetheless they expect it to cause profit margin issues for Nokia Corporation (NYSE:NOK). Also the company has had to lower prices in the U.S. in order to convince consumers to buy it.

As ValueWalk reported last month, Nokia Corporation (NYSE:NOK) is counting on the success of its Lumia’s handsets, which operate on Microsoft Corporation (NASDAQ:MSFT)’s Windows 8 platform. Nokia has experienced a number of financial setbacks in recent years.

Shares of Nokia Corporation (NYSE:NOK) dropped more than 2 percent in afternoon trades.

About the author

Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses.